IFS warns of regulator proliferation

The IFS School of finance has warned the All Party Parliamentary group on Insurance and Financial Services of a proliferation of "pseudo-regulators".

Speaking to the Group in the Houses of Parliament, Chris Ray, Director of Communications at IFS, noted that the Retail Distribution Review contains a requiremenrt for a programme of Continuing Professional Development (CPD), the current level is for 35 hours a year, with a percentage of it structured to be both verifiable and measurable.

He said: "The area that causes us concern is the the Accredited Bodies through which advisers will be required to verify their CPD and that the adviser is acting in accordance with a code of ethics. The majority of these bodies are the existing professional bodies. They will then accredit this through a Statement of Professional Standards (SPS).

"Without this statement an individual will not get accredited status from the Regulator and would not be able to practise as an adviser. These Accredited Bodies have the power to remove the SPS. In addition the FSA has said that in the event of complaints the FSA may revert action to the adviser's Accredited Body.

"The issuing gives the ability of the Acredited Body to prevent an individual from practicing, yet the FSA said it has no intention of devolving statutory authority to these bodies. This is making these bodies pseudo-regulators. Both consumers and advisers could look upon the SPS as a licence to practice and it should only be issued by the Regulator.

"We believe any practice that could cause confusion amongst consumers should be avoided, the issuing of a statement must lie with the FSA."

Group member Lord Lipsey questioned the FSA's right to require these bodies to issue the statements. Ray replied that as it stood it was actually illegal to require an adviser to become a member of a professional body in order to be regulated.